“It is fair to say that over the last six to nine months,the settings right across the industry didn’t keep up with the change[in the economy] – coming out of COVID,inflation,consumer confidence and so forth.
“The industry as a whole,which has seen bad debts spike,really missed that moment. And we are now going to have to dig our way out of that.
Zip had positioned itself as one of the main rivals in Australia to BNPL juggernaut Afterpay. But over the past 15 months,Zip’s share price has withered from a height of $12.35 to just 90 cents per share on Monday. The share price fall has been mainly driven by investor concern about the growth in bad debts from customers.
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The Age andHeraldrevealed last month that bad debts were growing in part because the average transaction per customer was so low it meant that for many groups it was too expensive to chase the debts from customers.
Smith-Gander,who is a leading non-executive director in Australia and took up the chairman role at Zip only a year ago,said the industry had been too accepting of bad debts as part of its growth story. “In the industry there was a bit of a feeling that well these are small amounts of money,so the payback for recovery and collection activity is not the same as if you’re collecting mortgage that’s gone bad.
“ I refute all of that because I think we use technology and you are able to be much clearer about what your book is like.”